Senior Managers of Mega Corp

question 5

Multiple Choice

Senior managers of Mega Corp.are entitled to receive large bonuses if they achieve earnings targets.What is the effect of this on the risks associated with recording of revenue?

• A)It increases fraud risks associated with revenue.
• B)It decreases fraud risks associated with revenue.
• C)It increases detection risks associated with revenue.
• D)It decreases control risks associated with revenue.

Analyze scenarios illustrating the principle of substitution in the context of perfect substitutes and ordinary goods.

Determine the impact of price changes on the optimal consumption bundle.

Apply the concept of indifference curves to demonstrate preferences and trade-offs between two goods.

Explain the significance of the rate at which goods are substituted to maintain consumer satisfaction.

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Definitions:

Ultramares Rule

A doctrine limiting the liability of auditors to third parties for negligence, except in cases of fraud or misrepresentation.

Near Privity

A relationship closely resembling that of direct contractual connection, often recognized in legal contexts despite the absence of an actual contract.

Foreseen Users

Refers to individuals or groups that a product, service, or piece of information is expected to reach or impact.

Fraud

Purposefully misleading someone for one's own benefit or to harm another person.